SMM Nickel Market Daily Review (2013-7-29)

SHANGHAI, Jul. 30 (SMM) – In Shanghai, #1 nickel prices were between RMB 97100-98200/mt in the morning, as LME nickel prices dropped, Jinchuan nickel prices were around RMB 98,000/mt, and Russian nickel prices were around RMB 97,000/mt. Transactions were muted due to the lack of directions and depressed market sentiment.

SMM surveyed 36 market players and found that 56% of them believe LME nickel prices will move between USD 13,500-13,800/mt. Although LME nickel prices rose, spot prices in Shanghai still lacked ability to advance despite Jinchuan nickel held prices firm, which are weighed below RMB 100,000/mt, with transactions quiet. LME nickel prices continued grow, exceeding 200,000 mt, while China’s domestic nickel and NPI inventories fell, which will keep LME nickel prices hovering between USD 13,500-13,800/mt.

28% believe LME nickel prices will rebound to USD 14,350/mt. They think LME nickel prices strengthened over the past two weeks due to tight NPI supply. Stainless steel plants all raised NPI procurement prices since last week, with Tsingshan hiking the price-to-factory three times last week to RMB 960/mt. Besides, nickel ore supply from Indonesia is also tight due to heavy rains and the nearing of Ramadan, which also pushed up nickel ore prices. Tsingshan raised nickel ore prices by RMB 20/mtu. Demand from steel plants for nickel will be strong.

16% believe LME nickel prices will likely fall to USD 13,200-13,500/mt. Downstream buying interest in Shanghai is weak. The liberalization of commercial lending rates, slowing growth in forex receipts in June, as well as the country’s large bank issuing dividends late in the month have raised expectations of tightening capital. If US employment data is positive, expectations of an end to QE3 will continue to weigh down base metals prices. Massive NPI capacity is being put into operation. In this context, there will be barely any positive news for the market.